I usually stay away from political arguments, but this discussion (taken with permission from member ‘Agreed’ on a music forum) merits repeating all over the place. Sit back and enjoy. The graphs are very cumbersome on WordPress, so for now, they are links.
//| So the latest buzz-word is “soaking” the rich to help pay for improved public health care. Naturally many wealthy people (and many people who will never be wealthy by any standard but who agree in principle out of some vague self-assured notion that they will one day join the ranks of the wealthy) are against the idea. Perhaps the most common sentiment is that raising the tax burden on the wealthy is unsustainable because the wealthy will simply go away; and further, businesses will leave or not be started in the first place because they won’t be willing to lose all that money.
Well, the first thing to remember is that taxation is not absolute; the top tax rate applies only to income earned over the cut-off point. Assume we had three tax brackets: 10% for $5 earned, 15% for $20 earned, and 30% for $60 earned. Someone who earned $25 would be taxed at 10% for the first $5, and then at 15% for the remaining $20. The same applies to the more sophisticated progressive tax system in the U.S.
The second thing to remember is that the majority of income earned by the top 1% of income earners (who control as much money as the bottom 50% combined) is that much of their added wealth every year comes from capital gains, which isn’t taxed at the top rate anyway; effective taxation rates for the very wealthy can be quite low, in the low to mid 20% or lower.
The third thing to remember is that the wealthy have, for the last 30 years, benefited from conservative economic policies which have systematically redistributed wealth from the lower and middle classes into the hands of the wealthy. That’s right, wealth redistribution has already occurred. I’ll expand on that, but to start things off here’s a graph of where the top tax rate has been and where it is. Of note are two facts: one, in the 1940s and 1950s the top rate was quite high, and yet America experienced excellent growth; two, the top tax rate is now at nearly its lowest value in the last hundred years and yet despite low top tax rates, businesses have been moving their operations away from America. Low top tax rates have not bought us jobs and the wealthy don’t care about an economy of fairness and justice or rewarding America for low taxation by keeping their jobs here.
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How does that relate to wealth redistribution, you might ask? Look at the following graph for the first hint:
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That graph indicates a few things. First, running up to the 1980s and Reagan, a period in which the GDP and median family income increased more or less in step. During that period, Americans enjoyed the fruits of their prosperity, as wages improved with GDP. However, starting around 1980, GDP has increased steadily (trending steeper in its increase than before), but the middle and lower classes have seen hardly any tangible benefits from that increase. To explain that phenomenon you need to understand what has happened to our workers.
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The above graphs show both manufacturing productivity in terms of inflation-adjusted dollars earned for their employers over a long stretch of time, and also general worker productivity over the last fifteen years relative to wages. Notice that while productivity has risen across the board, wages have remained stagnant. This is one element of the puzzle. Following is another:
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The CPI is a measurement of the costs of all goods and services to the typical consumer. Notice that right around the same time as the GDP detached in its growth from the median family income, the CPI began a very steep increase. Then, compounding the increase in CPI you have to take into account the even steeper increase in health care costs.
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And all of this has happened in a time of stagnant wages despite increases in productivity which put money in the hands of the few (remember the GDP:median family income). Speaking of GDP let’s look at how our health care expenditures as nation relate to our GDP over the past decades:
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That’s very high, accounting for more and more of our expenditures even as the CPI grows, too; in the mean time though the lower and middle classes have contributed heavily to our growing GDP through productivity gains, again, they’re not seeing higher wages as a result, so as the costs to all of us rise there’s nothing to offset them and it just ends up being more and more of our money. For reference here’s how America ranks in terms of health care expenditures as a percentage of GDP relative to other countries, including single-payer/UHC countries:
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Some Republicans have remarked that our health care might be expensive but that’s because it’s the best you can buy. I wish that were true, but it isn’t the case:
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So those in the lower and middle classes are seeing no returns on their vastly improved productivity and increased GDP even as consumer prices and health care costs skyrocket, and to add insult to injury for all that money (which people can barely afford, in some cases can’t afford) we’re buying lower quality health care, in terms of both absolute life expectancy and in how long we can expect to live in health. Meanwhile, the wealthy complain that they should not be tasked with helping to pay for the care because they don’t use it.
I disagree. First, their argument that if you raise taxes on the wealthy it will just kill jobs as they move off-shore and don’t maintain or start businesses is a sham argument. That has never been the case in the past, and most of their growth in wealth comes from capital gains and other instances of “making their money work for them,” a luxury they have over the working classes who have to use more and more of their income on goods and health care and which essentially makes every dollar the elite have “worth” more because of its liquidity. And second everyone who isn’t in the top 1% of income earners have seen no benefits from the conservative economic policy since Reagan; “trickle-down” economics never did trickle down, but rather consolidated power and wealth in the hands of the few while imparting no benefit to anyone else.
This graph should be considered alongside the previous two “outcomes” graphs, but there is an 11-image limit and I hit it.
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You might object that the poor already have access to health care in the form of mandated emergency care. While that’s true in a sense, it’s a bad argument. Health care cost-related bankruptcy is distressingly common in the U.S.; in an effort to remain solvent the hospital passes on the costs of their emergency room care to everyone else, which means that we as a country are already paying for health care for everyone anyway, we’re just doing it in the dumbest, least efficient, deadliest way possible. Remember how our health care expenditures rank relative to other countries with functioning single-payer or universal health care systems, compared to how our outcomes rank.
Empirical evidence shows that outcomes in other countries with single-payer and UHC systems are better more or less across the board than here in the United States. I have made the argument in this thread that we are getting rooked by our health care system as part of a larger problem of wealth redistribution which forces the lower and middle classes to spend more and more of their stagnant wages on necessities and health care. Ultimately this system is totally unsustainable even for the elite, because as health care consumes more and more of our GDP and wages don’t rise to match, the lower and middle classes will literally become insolvent, shattering our (almost literally) breakneck productivity and crashing the whole system. Remember that our productivity gains have not been accomplished freely; we are working longer and longer hours, putting more and more stress on our workers, and working until we are much older than before, in many cases never retiring and dying while still struggling to make ends meet.
The lack of comprehensive health care for all also has a deleterious effect on the market, preventing small business from being able to compete fairly with larger established institutions that are able to use their large employee base to negotiate better deals from entrenched insurance companies; this has the net effect of making us less competitive on the world markets as well, which is going to become even more of a problem as time goes on.
Health care is quite a multifaceted thing in America, there’s no doubt about that. I am not pleased with the plans currently being considered, but I am glad the senate is taking longer on the bill; Obama’s drummed-up urgency on the issue could otherwise be an excuse to pass ineffective legislation to meet a false deadline. Even if it’s harder we should do health care right the first time.
It’s a values issue: how will we care for the least among us as well as the best? It’s a free market issue: how will we ensure competitiveness on the world stage in a world where other countries provide health care, freeing businesses from that expense? It’s an economic policy issue: we are wasting money on poorer outcomes as a nation. And finally, it’s a pragmatic issue: we are already paying for everyone’s health care, but we are doing it wastefully rather than proactively, and in a way that kills people. |\\
And, from a recent Huffington Post article:
If conservatives get to call universal health care “socialized medicine,” I get to call private health care “soulless vampires making money off human pain.” The problem with President Obama’s health care plan isn’t socialism, it’s capitalism.






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